Companies keep increasing their stashes of cash. A rise in the cost of new debt and much-discussed but much-delayed tax reform in the US might finally turn that trend around in 2017—or not.    

Author: Maria Obiols

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Cash Piles Keep Growing

Technology companies are the undisputed kings of cash piling, taking over the top four spots in our fifth annual ranking of the Global Finance Cash 25—the 25 global public companies holding the most in cash and cash equivalents.

Considered geographically, the US sweeps the board, with 14 companies out of 25, four in the top five and seven in the top 10. Far from that score, Japan brings three companies to our top 25.

The top cash hoarders are showing growing numbers for their immediately liquid assets. Fifteen companies show short-term liquidity figures over $20 billion, compared to 14 last year and 15 the previous year. But above all, the cutoff to make our rankings this year was $16.3 billion, up significantly from 2016’s threshold of $13.5 billion or 2015’s $14 billion.

In this year’s ranking, Microsoft keeps the top slot position it won last year, its pockets lined with a staggering $113.2 billion in cash and equivalents, $16.8 billion more than the previous year. And it does so while increasing capital expenditures by more than 40%, to $8.3 billion, and taking its CapEx growth to two-digit figures again after a stall in 2015. A decline in Microsoft’s pile of cash is not to be expected this year; the company’s acquisition of LinkedIn last December will be financed through debt, and Microsoft might want to cling to its most liquid assets to avoid a negative impact on its credit ratings.

Apple climbs from the fifth to the second spot, with cash holdings up $25.6 billion from last year to $67.2 billion—an enormous hoard, although well behind Microsoft’s. Apple’s fast accumulation of cash is all the more remarkable because the company has also been able to sustain some of the highest levels of capital investment in the sector. After an increase of 18%, its CapEx reached an outstanding $13.5 billion. Oracle and Cisco closely follow Apple’s liquidity figures; but they started at already higher numbers, and their CapEx are much more modest.

In fifth place, Toyota Motor of Japan is the top-ranked nontechnology and non-US corporation on this year’s list, while General Electric follows. GE dropped from second to sixth position, with an effective decrease in the amount of cash, cash equivalents and short-term securities of almost a third, although there is some evidence of a recent bounce-back.

Samsung climbs from 12th to eighth, and Amazon from 16th to 10th. But the biggest jump is Abbot Laboratories. The Illinois-based pharmaceutical company more than tripled its cash and equivalents and has appeared from nowhere into 18th position. Honda’s leap is also remarkable: from 32nd last year to 17th this year, with an increase of $3.2 billion in cash on its balance sheet. Intel, on the other hand, fell from ninth to 23rd. Pfizer, after a steep decline last year, shaved another $5.4 billion off its liquidity to fall 11 positions in the ranking.

The US is the uncontested leader in corporate cash hoarding. “The technology sector today holds the most cash among US nonfinancial companies, accounting for 47% of the total, followed by healthcare/pharmaceuticals, consumer products and energy,” according to Richard Lane, senior vice president at Moody’s Analytics. Moody’s estimates the total cash and equivalents (including long-term marketable securities) in the balance sheet of US companies at $1.8 trillion, 9.2% more than the previous year.

The cash pile of nonfinancial companies in Europe, Middle East and Africa grew slightly, to a seven-year peak of €974 billion ($1.1 trillion), according to Moody’s Investors Service. The most cash-rich sectors in these areas are energy, automotive, telecommunications and utilities.

IS THIS THE NEW NORMAL?

Some were expecting the cash-hoarding trend to turn in 2016. Instead, it has intensified. Why do companies keep putting their cash under their mattress, and when can we expect this to change?

Increased geopolitical risks, coupled with memories of the recent recession, are keeping corporate decision-makers cautious. Hopes for growth have been dampened by actual figures, and spare capacity does not encourage new investment. In the US, companies are scaling back hopes for pro-growth policies from the Trump administration, such as corporate tax reform, increased infrastructure spending and regulatory roll-back. Some companies are also preparing for higher interest rates, by either consolidating their ability to pay debts or diminishing their need for future borrowing. Others have taken advantage of their sloshing liquidity for M&A dealmaking, and that is expected to continue in 2017.

Can we expect any changes to these trends in 2017? An S&P May report on corporate cash in the US has brought attention to companies’ increasingly high debt: “Adjusted leverage for both investment-grade and speculative-grade issuers is near decade highs and, conversely, the cash-to-debt ratio near decade lows.” Mark Smith, head of global liquidity in global transaction services at Bank of America-Merrill Lynch, says holding on to cash has allowed companies to build solid credit ratings that they are unwilling to risk. This fact, along with a drop in optimism about the US economy, has led treasurers to postpone investment plans, as shown in the Association for Financial Professionals (AFP) Corporate Cash Indicators Survey for the second quarter of 2017, where the outlook is “continued caution.”

And of course, in the US, there are expectations of a tax holiday for money that companies, particularly tech firms, have booked offshore. According to S&P, US corporate cash has reached an astounding $1.9 trillion, of which S&P estimates that 60% is held overseas; that is $1.1 trillion. Moody’s ups this figure to $1.3 trillion. Some are expecting repatriation to boost investment, wages and growth in the US; but S&P’s report suggests repatriated bounty would go “largely for share repurchases, but also for acquisitions and some debt repayments.” The 2004 repatriation tax holiday had limited impact on the real economy. But with legislative chaos in Washington—witness the GOP’s inability to revise healthcare law—many observers expect tax reform to fail as well.

METHODOLOGY

The Global Finance Cash 25 ranks publicly listed companies by cash, cash equivalents and short-term securities (those maturing between three months and a year) on their balance sheets. Data is gathered from almost 67,000 public companies worldwide. It is a ranking of nonfinancial corporations—we exclude financial insti-tutions from the list. Subsidiaries and nonpublic companies are excluded, and we use a minimum 25% holding for the path from a subject company to its ultimate owner as the cutoff for inclusion.

TOP 25 GLOBAL PUBLIC COMPANIES BY CASH ON BALANCE SHEET

Rank

Company

Country

Industry

Cash*  (current)

Total Assets
(Latest year available)

1.

MICROSOFT

US

Technology

113,239

193,468

2.

APPLE

US

Technology

67,155

321,686

3.

ORACLE (1)

US

Technology

66,078

134,991

4.

CISCO SYSTEMS

US

Technology

65,756

121,652

5.

TOYOTA MOTOR (2)

Japan

Automotive

48,680

421,092

6.

GENERAL ELECTRIC

US

Industrial

48,129

365,183

7.

JOHNSON & JOHNSON

US

Consumer goods

41,907

141,208

8.

SAMSUNG ELECTRONICS

South Korea

Consumer electronics

29,602

217,086

9.

TOTAL

France

Oil and gas

29,145

230,978

10.

AMAZON

US

Retail

25,981

83,402

11.

GENERAL MOTORS

US

Automotive

24,801

221,690

12.

BP

UK

Oil and gas

23,528

263,316

13.

COCA-COLA

US

Beverages

22,516

87,270

14.

DAIMLER

Germany

Automotive

21,745

256,134

15.

HON HAI PRECISION INDUSTRY

Taiwan

Consumer electronics

20,041

80,257

16.

TAIWAN SEMI-CONDUCTOR

Taiwan

Technology

19,572

58,410

17.

HONDA MOTOR

Japan

Automotive

18,795

169,193

18.

ABBOTT LABORATORIES

US

Pharma

18,775

52,666

19.

QUALCOMM

US

Telecoms

18,648

52,359

20.

VODAFONE

UK

Telecoms

18,623

192,620

21.

SONY

Japan

Consumer electronics

17,953

157,613

22.

PFIZER

US

Pharma

17,850

171,615

23.

INTEL

US

Technology

17,099

113,327

24.

HYUNDAI MOTOR

South Korea

Automotive

16,849

148,080

25.

HEWLETT PACKARD

US

Technology

16,347

79,629

Last available year 2016, except (1) 2017 and (2) 2015. Data valid as of July 28, 2017.  All figures in USD millions.                          

Data for all tables provided by: Orbis by Bureau van Dijk.

North America

Big tech companies keep climbing up the ladder in the North American most-rich companies list. General Electric has gone down from second to fifth, although the latest quarterly figures available in June show a strong recovery of the company’s liquidity, after the efforts made to lose weight and with it the legal “too big to fail” label that restricted part of its activities. Abbott Laboratories makes a huge leap and reaches 10th position, reflecting the sale of its eye-surgery unit, the acquisition of St. Jude Medical and its long-delayed purchase of medical-test maker Alere.

TOP Regional PUBLIC COMPANIES BY CASH ON BALANCE SHEET

Rank

Company

Country

Industry

Cash*  (current)

1.

MICROSOFT

US

Technology

113,239

2.

APPLE

US

Technology

67,155

3.

ORACLE (1)

US

Technology

66,078

4.

CISCO SYSTEMS

US

Technology

65,756

5.

GENERAL ELECTRIC

US

Industrial

48,129

6.

JOHNSON & JOHNSON

US

Consumer goods

41,907

7.

AMAZON

US

Retail

25,981

8.

GENERAL MOTORS

US

Automotive

24,801

9.

COCA-COLA

US

Beverages

22,516

10.

ABBOTT LABORATORIES

US

Pharma

18,775

11.

QUALCOMM

US

Telecoms

18,648

12.

PFIZER

US

Pharma

17,850

13.

INTEL

US

Technology

17,099

14.

HEWLETT PACKARD

US

Technology

16,347

15.

PEPSICO

US

Beverages

16,125

Last available year 2016, except (1) 2017. Data valid as of July 28, 2017.   All figures in USD millions. * Includes cash & cash equivalents for the most recent year available
^ Includes cash & cash equivalents for the prior year

LATIN AMERICA

Latin America’s list is, as usual, somehow skewed by the presence of several tax havens like the Cayman Islands, Bermuda and Curaçao; so some of the most-rich companies domiciled there actually operate somewhere else. That’s the case with the three most cash-rich in our list. Global oilfield services company Schlumberger keeps its first position, despite losing almost $4 billion of its cash pile. Hong Kong–based real estate company Cheung Kong Property Holdings, created in 2015, makes it straight to the second position in our list, pushing Ctrip.com, the Chinese travel services provider, to third place. Genuinely Latin American Embraer, the Brazilian aeronautical firm, takes the fourth spot; while another Hong Kong–based company, cellulose sanitary products manufacturer Hengan International, makes it to fifth position.

TOP Regional PUBLIC COMPANIES BY CASH ON BALANCE SHEET

Rank

Company

Country

Industry

Cash*  (current)

1.

SCHLUMBERGER

Curaçao

Industrial

9,257

2.

CHEUNG KONG PROPERTY HOLDINGS

Cayman Islands

Real estate

8,073

3.

CTRIP.COM

Cayman Islands

Travel services

4,934

4.

EMBRAER

Brazil

Aerospace

3,018

5.

HENGAN INTERNATIONAL

Cayman Islands

Consumer products

2,142

6.

SINA CORPORATION

Cayman Islands

Media and communications

2,038

7.

FALABELLA

Chile

Retail

1,823

8.

COSAN LIMITED

Bermuda

Food and combustibles

1,777

9.

BROOKFIELD PROPERTY PARTNERS

Bermuda

Real estate

1,769

10.

NEW ORIENTAL EDUCATION.

Cayman Islands

Education

1,734

Last available year 2016. Data valid as of July 28, 2017.   All figures in USD millions.

* Includes cash & cash equivalents for the most recent year available
^ Includes cash & cash equivalents for the prior year

WESTERN EUROPE

There’s been a good deal of movement in Western Europe’s list. BP jumps to second position, with $23.5 billion, and joins Total, which with $29.1 billion keeps the top spot for the third year in a row, despite a slight decrease of its cash stash. Daimler follows third with $21.7 billion in its coffers. In addition to BP, there are five other newcomers to the 15 Western European richest: Danone, Peugeot, National Grid, BHP Billiton and Nestle. The biggest falls in the rankings are for Enel and Deutsche Telekom, which have ended 17th and 22nd this year from fourth and fifth last year.

TOP Regional PUBLIC COMPANIES BY CASH ON BALANCE SHEET

Rank

Company

Country

Industry

Cash*  (current)

1.

TOTAL

France

Oil and gas

29,145

2.

BP

UK

Oil and gas

23,528

3.

DAIMLER

Germany

Automotive

21,745

4.

VODAFONE

UK

Telecoms

18,623

5.

RWE

Germany

Utilities

15,180

6.

DANONE

France

Food products

14,376

7.

MEDTRONIC (1)

Ireland

Medical equipment

13,708

8.

PEUGEOT

France

Automotive

13,639

9.

AIRBUS

Netherlands

Aerospace

12,877

10.

NATIONAL GRID

UK

Utilities

12,303

11.

SIEMENS

Germany

Industrial

11,835

12.

SANOFI

France

Pharma

10,829

13.

BHP BILLITON

UK

Mining

10,319

14.

NOKIA

Finland

Telecoms

9,831

15.

NESTLE

Switzerland

Food products

9,133

Last available year 2016, except (1) 2017. Data valid as of July 28, 2017.   All figures in USD millions.           * Includes cash & cash equivalents for the most recent year available
^ Includes cash & cash equivalents for the prior year

CENTRAL/EASTERN EUROPE & TURKEY

Russian companies keep losing weight as the most-rich companies in Central and Eastern Europe, although Lukoil, Surgutneftegas and Novatek still monopolize the three top spots. Enka, the Turkish construction company, which disputed this monopoly as second last year, has disappeared from the top 10. But two other Turkish firms appear as newcomers to the list: Alarko, a construction conglomerate, as eighth; and Kardemir, a metals specialist, as ninth.

TOP Regional PUBLIC COMPANIES BY CASH ON BALANCE SHEET

Rank

Company

Country

Industry

Cash*  (current)

1.

LUKOIL

Russia

Oil and gas

4,309

2.

SURGUTNEFTEGAS

Russia

Oil and gas

1,787

3.

NOVATEK

Russia

Industrial

796

4.

ASSECO POLAND

Poland

Technology

360

5.

POLIMEX - MOSTOSTAL

Poland

Civil engineering

170

6.

BIM BIRLESIK MAGAZALAR

Turkey

Retail

164

7.

CD PROJEKT

Poland

Video gaming

133

8.

ALARKO HOLDING

Turkey

Construction

122

9.

KARDEMIR

Turkey

Metal products

94

10.

TOGLIATTIAZOT

Russia

Chemicals

77

Last available year 2016. Data valid as of July 28, 2017.   All figures in USD millions.

* Includes cash & cash equivalents for the most recent year available
^ Includes cash & cash equivalent for the prior year

ASIA-PACIFIC

The Asia-Pacific most-rich companies list shows great stability, with no changes in the names and very few in their positions. There are no changes in the top four spots, and Toyota Motor keeps the first for the third consecutive year with $48.7 billion of cash in its balance sheet, $5.3 billion more than the previous year. The only remarkable change is for Honda, which increased its cash pile by $3.2 billion, climbing from ninth to fifth position.

TOP Regional PUBLIC COMPANIES BY CASH ON BALANCE SHEET

Rank

Company

Country

Industry

Cash*  (current)

1.

TOYOTA MOTOR (1)

Japan

Automotive

48,680

2.

SAMSUNG ELECTRONICS

South Korea

Consumer Electronics

29,602

3.

HON HAI PRECISION INDUSTRY

Taiwan

Consumer Electronics

20,041

4.

TAIWAN SEMICONDUCTOR

Taiwan

Technology

19,572

5.

HONDA MOTOR

Japan

Automotive

18,795

6.

SONY

Japan

Consumer Electronics

17,953

7.

HYUNDAI MOTOR

South Korea

Automotive

16,849

8.

MITSUBISHI

Japan

Automotive

15,335

9.

GREE ELECTRICAL

China

Consumer products

13,758

10.

MITSUI & CO (1)

Japan

General trade

13,236

Last available year 2016, except (1) 2015. Data valid as of July 28, 2017.   All figures in USD millions.

* Includes cash & cash equivalents for the most recent year available
^ Includes cash & cash equivalents for the prior year

MIDDLE EAST

United Arab Emirates real estate developer Aldar Properties appears for the first time in our list and makes it straight to the top slot, with $1.8 billion of cash in its pockets. Last year’s first, Qatar Navigation, falls to second position. Similarly, Israeli Check Point Software moves from second to third. Tasnee, last year’s third, has reduced its cash pile almost 24% and drops to fifth, while Qatar Fuel’s position remains unchanged.

TOP Regional PUBLIC COMPANIES BY CASH ON BALANCE SHEET

Rank

Company

Country

Industry

Cash*  (current)

1.

ALDAR PROPERTIES

UAE

Real estate

1,823

2.

QATAR NAVIGATION

Qatar

Shipping

1,419

3.

CHECK POINT SOFTWARE

Israel

Technology

1,373

4.

QATAR FUEL

Qatar

Oil and gas

870

5.

TASNEE

Saudi Arabia

Basic materials

775

6.

MOBILE TELE-
COMMUNICATIONS

Kuwait

Telecoms

685

7.

AIR ARABIA

UAE

Airlines

495

8.

BOUBYAN PETROCHEMICAL (1)

Kuwait

Petro-chemicals

465

9.

SAHARA PETROCHEMICAL

Saudi Arabia

Petro-chemicals

461

10.

SAVOLA GROUP

Saudi Arabia

Industrial

355

Last available year 2016, except (1) 2017. Data valid as of July 28, 2017.   All figures in USD millions.

* Includes cash & cash equivalents for the most recent year available
^ Includes cash & cash equivalent for the prior year

AFRICA

All 10 most-rich African companies are based in South Africa. Johannesburg’s chemicals company Sasol leads the ranking once again, despite a reduction of $833 million of its cash pile. Naspers, Grindrod and Aspen Pharmacare all climb one position in the ranking; as MTN, the South African mobile phone operator, drops off the list. Two mining companies, Gold Fields and Impala Platinum, make it to the top 10 for the first time and take over the sixth and seventh posts; while the other newcomer, Datatec, a technology solutions-and-services provider, is ninth. n

TOP Regional PUBLIC COMPANIES BY CASH ON BALANCE SHEET

Rank

Company

Country

Industry

Cash*  (current)

1.

SASOL LIMITED

South Africa

Chemicals

3,541

2.

NASPERS (1)

South Africa

Media and communications

1,714

3.

GRINDROD

South Africa

Shipping

824

4.

ASPEN PHARMACARE

South Africa

Pharma

738

5.

SAPPI

South Africa

Forest products

703

6.

GOLD FIELDS

South Africa

Mining

527

7.

IMPALA PLATINUM

South Africa

Mining

459

8.

SHOPRITE

South Africa

Retail

459

9.

DATATEC LIMITED (1)

South Africa

Technology

413

10.

WILSON BAYLY HOLMES - OVCON

South Africa

Construc-tion

391

Last available year 2016, except (1) 2015. Data valid as of July 28, 2017.   All figures in USD millions.

* Includes cash & cash equivalents for the most recent year available
^ Includes cash & cash equivalents for the prior year

 

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